Nominated for two Academy Awards, the cult 1988 movie The Unbearable Lightness of Being, which shares the same name as this week’s headline, starred Daniel Day-Lewis, Juliette Binoche and Lena Olin.
Some may know the movie was a screen adaptation of Czech writer Milan Kundera’s iconic 1984 work that was set in the Prague Spring and banned in Singapore until 2009.
However, not many will know the story is Kundera’s repudiation of the philosophical concept of eternal return (or eternal recurrence). If, as Friedrich Nietzsche believed, everything in life happens an infinite number of times, causing the “heaviest of burdens”, then a personal life in which everything happens only once loses its “weight” and “significance”. This belief contrasts with Greek philosopher Parmenides, who held that light (represented by warmth and fineness) is positive, while Nietzsche’s heaviness was negative.
In Kundera’s story, the “light” and “heavy” characters meet unhappy fates. He also demonstrated how unbearable it is that each choice can only be made once with one possible result, and that no one can ever know what other choices would have wrought. As the protagonist in the movie discovers what truly brings him happiness and confesses it to his partner, they end their lives in an accident. A representation of humanist existentialism, it emphasises individual freedom and the creation of purpose and meaning in our lives.
All this is heavy reading for a column generally focused on financial markets, although I tend to reflect on other topics and consider how they bear on markets and life. It is perhaps a tad philosophical, too, after successfully bringing the Community Chest Sharity Elephant up and down to Mt Fuji in one crazy day, which gave me muscle fatigue the morning after, my legs giving out several times even as I drank protein shots to recover.
The day after, Sharity proceeded to go up Mt Akadake over two days and a night, which involved a lot of technical climbing, and I found myself hugging rocks, staying low on steep, narrow ridges less my legs buckle from weakness, or from looking down sheer drops. All this in the comfort that my portfolio positioning, as shared in last week’s column, appeared to be playing out as planned, even with some unexpected boosts.
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Those who know me would know that I enjoy trading. I was once a prop trader at a local securities firm. A news junkie, I used to “relax” on Friday evenings after work and dinner from 10pm to 4am when the US markets closed, watching Bloomberg TV or CNBC. The tickers moving across the screen, prices, indices, news and talking heads were “destressing” for me. To get a kick, I took a few short-term trades. Sometimes, I got lucky and let the lightheadedness get to me. When I did not get lucky, I learnt to cut heavy short-term trades quickly.
There is no right or wrong in any moral sense. But after earning a few pennies or pounds from time to time, then what? If there is no purpose and meaning after all that in life, then the lightness is unbearable. My trip to Japan was rewarding, not because I reached the summits of Mt Fuji and Mt Akadake, but because I achieved it while lacking fitness, training and nursing health issues.
At various points up along Mt Fuji, where there was cellphone reception, I received updates from my banking apps and WhatsApp messages from my broker, who informed me that my good-til-cancelled (GTC) sell orders were done. I then proceeded to put some sale proceeds into REITs but had to restrain myself from doing more since I hate to be in cash. After all, I was in Japan for a mission. Upon my return, I hit my target of raising $138,000 for Community Chest through my giving.sg campaign, with broad-based support from many kind friends, including those from the financial community like Azalea Investment Management and people I do not know.
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All the leaves are falling into place
Chew On This mainly was correct about the Singapore Surprise this September. We outdid ourselves by breaching a 17-year high on the Straits Times Index (STI) above 3,642, all the way back to 2007 and shedding some of our traditionally dull skin in the process. We are (I believe temporarily) consolidating to about 3,500 before making an attempt for 3,800 points. The movement is much like in high-altitude climbing. To reach the top of high peaks over several days, like Mt Kilimanjaro or Mt Everest, one needs to climb high and camp low as part of acclimatisation.
Putting money where my mouth is, the last of my 10-year dollar-cost collection of STI ETFs (exchange-traded funds) was sold on the way up, as suggested in this column in earlier September. There may yet be a time to buy in again in anticipation of the recommendations of the capital market committee review, which isn’t anytime soon. In the meantime, we have to cross the dicey month of October with the US election and quarterly results season for bellwethers, including the three local banks and Singapore Telecommunications Z74 (Singtel), which comprise approximately half of the STI.
The market is sending a softer signal while brokers belatedly raise price targets and upgrade calls. Singtel’s almost 50% run from May (including dividends) faltered at around $3.45 and is back to $3.20. While “the sum of its parts is higher” makes a compelling argument, as my prop trading partner used to say, all good horses must rest. They have the capital to pay higher dividends, which can be affordable based on the roaring success of its market in India, as Singtel owns a decent stake in Bharti Airtel. Still, if operating results do not meet already raised forecasts, they could be in for consolidation and could hold back the STI a tad.
Similarly, analysts see silver linings for the banks. These include holding long-term loans so profits are locked in. If their credit quality remains strong, the run of good profitability should continue despite lower Fed interest rates. With stock and investment activity picking up in wealth management, fee income might even steady the ship. At current prices for our flagship bank stocks, which have carried the STI, there is also a risk of undershooting higher expectations.
For these reasons, I am mid- and long-term bullish and will take my time to re-enter blue chips or ETFs here. The short-term technical indicators show a small overhang as well. As I have since outgrown my CNBC and Bloomberg addiction, preferring to read apps of BBC or The Edge Singapore, the irony is I have become a more patient investor than an active trader, even if September was an excellent rediscovery of rotation and profit-taking. Last week’s experience in Japan showed that being in the moment and existing for a reason and purpose gives me the strength to overcome many odds. By staying zen and catching some early autumn red leaves in the mountains, I may get a better re-entry point if some potential turbulence happens on the global front.
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While the STI finds its footing towards base camp at 3,500 or slightly lower, others are moving up the levels. The technicals for our local REITs continue to improve with price rises and momentum in their favour, which was one of our theories. The call by Chew On This to switch to STI laggards like Sembcorp Industries U96 , Keppel Corp and Singapore Post S08 from the big hitters has also paid off, with these stocks recovering closer to their one-year highs as the heavyweights descend.
The rinse-and-recycle Golden Eggs shared in September has turned out to be rewarding and may still have legs as markets look ahead and expect further rate cuts next year. A post-US election wobble of the political or economic sort may bring it forward, and companies sensitive to interest rates for debt may still have a tailwind.
My thesis of going long on China before the Golden Week paid off, too. However, I was not privy to the “bolder-than-expected” stimulus unleashed by the government just as I left for Japan. Given that most of my China ETF allocation was short-term, given positive technical momentum building gradually from the third week of September from a very low base, it was a high conviction (more upside potential than downside risk) trade but not one to bet the house on. Thus, I was surprised to get updates on Mt Fuji when in the range of 4G signal. The higher I ascended, the more left orders from Lion-OCBC Securities Hang Seng TECH ETF to Lion-OCBC Securities China Leaders ETF and long beaten-up CapitaLand China Trust AU8U (CLCT) popped up with a bang. After being oversold in the doldrums for the longest time, alongside general positivity in REITs, CLCT rose 20%, ending last week at 85.5 cents, leaving me behind for dust at 77.5 cents, a breakout above its previous six-month decline to the mid-60-cent levels. Amazingly, it trades at a possible discount to book value in the low 60% levels!
Similarly, Hang Seng TECH ETF’s unit price looked like it fell into a never-ending Nietzsche’s abyss, resulting in the fund rebounding from the low 50-cent levels to 72 cents, the bulk of it after China’s stimulus bang. I, too, was left behind on the ascent, probably closer to Camp 2. The broader-based China Leaders ETF had a 10% pop. I was bemused to take some profit with GTC orders left behind, but I am not sorry that I still kept some in the reserve tank.
China is back in focus. In an update, UBS Global Wealth Management’s chief investment officer thinks that the board market can rally by another high single-digit percentage, but whether it can go on further will depend on execution or continuation, which has seemed lacking in the past few years. Still, the markets run first, and investors ask questions later. China’s onshore markets will be shut for the Golden Week, which starts on Oct 1, and folks will have a party in Hong Kong.
For those in Singapore who find the week-long market holiday unbearable, there are China proxies in Singapore to play. Stocks trading a fraction of their net asset value (NAV), like Yanlord Land Group Z25 and Yangzijiang Financial Holding YF8 , have rallied 25% and 15%, respectively, so far, and the latter is still trading within its cash in bank per the last financial update. If China’s economy is turning a corner, and its markets have come up from a prolonged low base, then laggards for stocks outside China could be opportunistic, which may be the reason for Wilmar International F34 ’s 7% one-day move on Sept 27 after being one of the biggest STI stock laggards together with Thai Beverage Y92 .
Or another long-forgotten REIT whose business performance has done well through Covid. Sasseur REIT has also re-rated by about 5%, albeit not from such a low base as CLCT. But if consumption picks up, there may also be some gold on this mountain. It is time to do more research when I return after last week’s pit stop, which has left me lighter on investment allocation but not an unbearable one.
Chew Sutat retired from Singapore Exchange S68 after 14 years as a member of its executive management team. During his watch, the exchange transformed from an Asian gateway into a global multi-asset exchange and he was awarded FOW’s Lifetime Achievement Award. He serves as chairman of the Community Chest Singapore
